DA ITAD BIR Ruling No. 123-07

December 13, 2007 DA ITAD BIR RULING NO. 123-07 Sec. 106 & 108; Article 34, Vienna Convention on Diplomatic Relations; BIR Ruling No. DA-ITAD-133-03 Embassy of the Bolivarian Republic of Venezuela Unit 17 A, Multinational Bancorporation Centre 6805, Ayala Avenue Makati City Gentlemen : This has reference to your Note No. 219 dated November 8, 2007 referred to this Office by the Department of Foreign Affairs (DFA), requesting for the exemption from payment of value-added tax (VAT) on the local purchase of one (1) motor vehicle, for the official use of the Embassy of the Bolivarian Republic of Venezuela, specifically described as follows: HaECDI Make: Isuzu Alterra 5.1 4X4 A/T Model Year: 2007 Color: Sterling Silver Engine Number: 4JJ1-5EZ5768 Chassis Number: MPAUCS85H7T100152 In reply, please be informed that Article 34 of the Vienna Convention on Diplomatic Relations reads: "ARTICLE 34 A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except: (a) indirect taxes of a kind which are normally incorporated in the price of goods or services; xxx xxx xxx" Thus, the tax exemption privilege of an Embassy and/or its diplomatic agents does not include exemption from value-added tax (VAT) and ad valorem tax on its local purchases of goods and services. In other words, purchases by that Embassy of goods and/or services shall, in general, be subject to the value-added tax prescribed under Sections 106 and 108, all of the National Internal Revenue Code of 1997. EHITaS However, applying the principle of reciprocity, this Office may confirm exemption of the Embassy of the Bolivarian Republic of Venezuela and/or its personnel on their purchases of locally-assembled motor vehicles it appearing from the list submitted by the Department of Foreign Affairs as of November 8, 2007, that your Government allows similar exemption to Philippine Embassy and its personnel on their purchase of locally-assembled motor vehicles in your country. Hence, the local purchase of one (1) unit of 2007 Isuzu Alterra 5.1 4X4 A/T for the official use of the Embassy of the Bolivarian Republic of Venezuela is exempt from VAT. (BIR Ruling No. DA-ITAD-133-03 dated August 26, 2003) This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. cSDHEC Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service